In my eyes, Marks & Spencer (LSE:MKS) was one of the stand-out performers in the stock market last year. The Marks & Spencer share price rallied by a whopping 106%, moving up from the FTSE 250 to the FTSE 100 in the process. Here’s what went on during the crazy year.
Getting the ball rolling
To get some context on the broader picture we need to zoom out. For much of the past five years the stock has been a rollercoaster, characterised by sharp increases and steep declines. This followed the fundamental problems it had of maintaining tired stores and losing customers to competitors.
Add into the mix, the problems of rising grocery inflation, which started back in 2021. At the start of 2022, the business announced a strategy to reshape the firm.
As we came into the start of 2023, there was more optimism in the air. In January, a trading update showed that the Christmas trading period yielded a total sales increase of 9.9% over the prior year.
This was backed up in early Q2 with the full-year results for the prior year. Sales jumped by 9.9% year on year, with profit before tax increasing 21.4%. At £475.7m, this was the highest profit figure since before the pandemic.
Momentum pushing on
Investors were now all aboard the revamped business, which was starting to catch attention. Measures such as making £400m of structural cost savings over five years were being combined with focusing store openings in growth areas.
The firm was also seeing the benefits of the joint venture with Ocado as well as improving its own supply chain. I could argue that such logistics improvements should have been done years ago, but the point is that the company was finally catching up to where it needed to be in order to be competitive.
Into August, the management team had more to cheer about, with the stock promoted back to the FTSE 100. It had dropped out of the main index back in 2019 when it was in the doldrums.
More good news, but risks ahead
As we came towards the end of the year, the half-year results showed a 56.2% jump in profit versus H1 of the previous year. The dividend was reinstated for the first time since 2020, giving income investors a reason to consider buying the stock for dividends.
For a stock to double in a year, everything needs to go well. That has certainly been the case for Marks & Spencer. However, this doesn’t make it risk-free for this year. In fact, it flagged up uncertainty going forward due to factors such as high interest rates and geopolitical events. The UK consumer still isn’t feeling overly optimistic and this could dampen demand this year.
Even with the risks ahead for 2024, the past year has been stellar for the retailer and it carries a lot of positive momentum with it right now.
